Gary's blog

Big bank hikes prime rate

HomeNews

by Justin da Rosa01 Nov 2016

Broker fears were confirmed Tuesday, with one big bank raising its prime rate less than a month following new mortgage rules.

TD Canada Trust announced in a note to brokers Tuesday that it is changing its mortgage rates, including increasing its prime rate to 2.85%.

The prime rate has been held at 2.70% for more than a year, according to the broker who shared the announcement with MortgageBrokerNews.ca on condition of anonymity.

“When a bank changes their ‘version’ of bank prime it also serves as an invitation for the other banks to join in and do the same,” the broker said. “Naturally if they all change the public is screwed and all the banks make more profit.

Bank of Canada hints at future housing policy

The Governor of the Bank of Canada hinted at future macroprudential policy in a telling speech Tuesday.

Governor Stephen Poloz said the Bank of Canada is more likely to target household and housing vulnerabilities through macroprudential policies as opposed to interest rate tampering.

“Our view is that these so-called macroprudential policies are best placed to deal with threats to financial stability because they can be designed to target specific financial vulnerabilities. In contrast, adjusting interest rates is a very blunt tool with widespread effects,” Poloz said. “Given all the work done to strengthen the global financial system over the past few years, it makes even more sense to separate monetary policy from efforts to stabilize the financial system.”

The Bank of Canada has slashed its target for the overnight rate twice since January of last year, largely in response to falling oil prices. Rate cuts have an impact on mortgage rates, as the country’s variable rates are closely tied to the central bank’s benchmark.

These 5 housing markets are the ones to watch in 2017

Up to a million Canadians would struggle to cope with a 1 per cent rise in interest rates with 700,000 at risk from even a 0.25 per cent rise

Five housing markets have been identified as the ones to watch in the coming year but not all of them are listed for positive reasons.

As well as current hot markets of Vancouver and Toronto, a new survey by the Urban Land Institute and PwC Canada predicts that Ottawa, Winnipeg and Montreal will be noteworthy in 2017.

Vancouver has been named as the top market for investment, development and housing market, with the rental market showing demand, especially from millennials, while tight inventory is pushing up prices.

“While Calgary continues to redefine its market, Vancouver continues to be a positive outlier in the West and outpace the country in terms of growth,” says John Bunting, Partner and BC Real Estate Leader, PwC Canada.

Toronto is also under pressure from tight inventory, increasing home prices. The report says that renovations are strong due to the high cost of moving. Poll respondents highlight government land use policies as a key barrier to construction growth.

Ottawa will remain a slow market with falling demand for new homes and housing starts declining amid shelved development plans.


Gary Marshall
Gary Marshall
REALTOR®